Unctad pitches reforms as global container crisis bites
AMID the shortage of containers and container ships, the United Nations Conference on Trade and Development (Unctad) urged policymakers to provide further reforms in trade digitalization and to improve tracking of vessels.
In a recent policy brief, the international agency said carriers, ports and shippers are likely to deal with the disruption caused by shortage of empty containers— which has been observed since late last year—for several months.
“No contingency plans were in place to preempt the lack of availability or to mitigate its negative impacts,” Unctad said.
Still, Unctad said policy-makers can help make supply chains resilient amid the lockdown measures imposed in the pandemic.
The UN agency highlighted the need for digitalization to facilitate trading in a safer manner.
“Customs officials, port workers and transport operators have recognized the need to reduce physical contact, while at the same time keeping ships moving, ports open and cross-border trade flowing,” the policy brief noted.
Unctad said policy-makers should “proactively engage” in enforcing trade and transport reforms to be wellprepared for potential future disruptions in the supply chains.
Meanwhile, Unctad said the recent container shortage shocked the stakeholders, noting that there has been a push for the monitoring of port calls and liner schedules, in addition to seeking improvement in tracing and port call optimization.
“Policy-makers need to promote transparency and encourage collaboration along the maritime supply chain, while also ensuring that potential market power abuse is kept in check or prevent,” it added.
Competition authorities are also told to ensure monitoring of freight rates and market behavior.
The international agency noted that shippers have complaints over having no access to empty containers for exports; high freight rates; and blank sailings, which refers to skipped port calls resulting in mismatch of supply and demand for empty vessels. Competition authorities, Unctad said, are investigating if there is abusive behavior on the part of maritime transport providers.
“It remains important for policy-makers to continue to strengthen national competition authorities in the area of maritime transport and ensure that they are prepared to provide the requisite regulatory oversight,” the UN agency said.
Cause of shortage
UNCTAD noted that the demand for empty containers was much higher than the supply of shipping capacity.
The agency explained that the disruptions caused by the pandemic, trade imbalance and changing trade patterns resulted in “shifts in the geography of container trade.”
“Empty boxes were left in places where they were not needed, and repositioning had not been planned for,”it noted, adding that blank sailings worsen the situation.
The current container crisis, Unctad said, shows the delays in maritime supply chain due to constraints amid the pandemic. These include shortage in port labor, port congestions and capacity constraints in truck, among others—all of which prolong the container dwell times.
“added to this is the fact that, since end-2020, container ships have begun to anchor off the west coast of North america, waiting for berths to become free. Full containers, still containing holiday decorations in February 2021, were stuck on ships, leading to a further shortage in capacity,” Unctad said.
The Businessmirror earlier reported that the lack of available containers has caused shipment delays of two weeks to one month, affecting the revenues of the exporters.